Year-End Tax Planning Checklist: 15 Moves to Lower Your Tax Bill

Retirement Contributions (Moves 1-4)

1. Max Out Your 401(k) Contributions

The 2026 401(k) contribution limit is $23,500 ($31,000 if age 50+). If you have not maxed out, increase your per-paycheck contribution for the remaining pay periods. Traditional 401(k) contributions reduce your taxable income dollar-for-dollar, directly lowering your tax bracket. If you are in the 24% bracket, contributing an additional $5,000 saves $1,200 in federal taxes alone.

Check with your employer whether they allow mid-year contribution changes and if they offer a true-up match (matching the full annual percentage regardless of contribution timing). Some employers stop matching once you hit the limit, so spreading contributions evenly may maximize your match.

2. Contribute to a Traditional IRA

You have until April 15 of the following year to make Traditional IRA contributions, but planning now ensures you do not forget. The 2026 limit is $7,000 ($8,000 if 50+). If you or your spouse are not covered by a workplace retirement plan, the full contribution is tax-deductible regardless of income. If you are covered by a workplace plan, the deduction phases out based on MAGI. For strategic conversion planning, see our Roth IRA Conversion Strategy.

3. Fund Your HSA to the Maximum

If you have a high-deductible health plan, the Health Savings Account (HSA) is the most tax-advantaged account available. For 2026, limits are $4,300 for individual coverage and $8,550 for family coverage (plus $1,000 catch-up if 55+). HSA contributions reduce taxable income, grow tax-free, and can be withdrawn tax-free for medical expenses. Unlike FSAs, unused HSA funds roll over indefinitely.

You can make HSA contributions until April 15 of the following year, designated for the prior year. But contributing before December 31 gives you the payroll tax advantage if contributing through your employer (employer-facilitated contributions are exempt from FICA taxes).

4. Consider a Solo 401(k) or SEP IRA (Self-Employed)

Self-employed individuals have access to significantly higher retirement contribution limits. A Solo 401(k) allows up to $23,500 as employee contribution plus 25% of net self-employment income as employer contribution, up to a combined $70,000 for 2026. A SEP IRA allows up to 25% of net SE income (up to $70,000). These contributions directly reduce your self-employment income and income tax. A Solo 401(k) must be established by December 31, though contributions can be made until the tax filing deadline.

Income Timing Strategies (Moves 5-7)

5. Defer Income to Next Year

If you expect to be in the same or lower tax bracket next year, deferring income to January can reduce your current-year tax bill. Strategies include delaying year-end bonus payments (if your employer allows it), postponing the closing date on asset sales, deferring freelance invoices so payment arrives in January, or delaying Roth conversions until the new year.

This strategy is particularly powerful if you are near a bracket threshold. For example, if deferring $5,000 of income keeps you in the 22% bracket instead of the 24% bracket, you save $100 on those dollars. Use our Income Tax Calculator to model the impact of deferring specific income amounts.

6. Accelerate Income If You Expect Higher Rates Next Year

The opposite strategy applies if you expect higher income (or higher tax rates) next year. Pull income into the current year by invoicing early, exercising stock options, or taking capital gains while you are in a lower bracket. This is especially relevant around tax law changes or if you anticipate a promotion, inheritance, or retirement distribution next year.

7. Harvest Investment Losses (Tax-Loss Harvesting)

Review your investment portfolio for positions trading below your cost basis. Selling these positions realizes capital losses that offset capital gains from other investments. Up to $3,000 of net losses can offset ordinary income. Losses beyond that carry forward indefinitely. Read our complete Tax-Loss Harvesting Guide for wash sale rules and strategies. Calculate your gains with our Capital Gains Calculator.

Deduction Optimization (Moves 8-11)

8. Bunch Charitable Donations with a Donor-Advised Fund

If your total itemized deductions are close to the standard deduction ($15,000 single, $30,000 joint for 2026), consider bunching two or more years of charitable donations into one year. A donor-advised fund (DAF) allows you to make a large tax-deductible contribution in one year while distributing the funds to charities over multiple years.

For example, instead of donating $5,000 per year (which may not push you over the standard deduction threshold), contribute $15,000 to a DAF in one year and take the standard deduction in alternating years. This strategy can save thousands compared to donating the same total amount evenly each year. Learn more about itemizing in our Tax Deductions Guide.

9. Donate Appreciated Stock Instead of Cash

Donating appreciated stock held for more than one year to a qualified charity gives you a double benefit: you deduct the full fair market value of the stock, and you avoid paying capital gains tax on the appreciation. If you own stock worth $10,000 that you purchased for $3,000, donating it gives you a $10,000 deduction while avoiding $7,000 in taxable gains.

10. Prepay Deductible Expenses

If you plan to itemize, prepaying certain expenses before December 31 increases your current-year deductions. Consider prepaying January's mortgage payment (to deduct the additional interest in the current year), paying your Q4 estimated state income tax before year-end instead of January 15, paying outstanding medical bills, or making property tax payments before the due date. Remember the $10,000 SALT deduction cap limits the combined benefit of state income tax and property tax prepayments. Use our Property Tax Calculator to estimate your property tax obligations.

11. Maximize Business Expense Deductions

If you are self-employed, purchase needed business equipment, software, or supplies before December 31. Section 179 allows you to deduct the full purchase price of qualifying equipment in the year of purchase rather than depreciating it over several years. The 2026 Section 179 limit is $1,250,000. Do not buy things you do not need just for the deduction, but accelerate planned purchases into the current tax year.

Tax Credits and Adjustments (Moves 12-14)

12. Claim Energy-Efficient Home Improvement Credits

The Energy Efficient Home Improvement Credit (25C) covers 30% of costs for qualifying improvements up to $3,200 per year. Eligible improvements include heat pumps, central air conditioning, insulation, energy-efficient windows and doors, water heaters, and home energy audits. If you planned these improvements anyway, completing them before year-end captures the credit for the current tax year.

The Residential Clean Energy Credit (25D) covers 30% of costs for solar panels, solar water heaters, battery storage, and geothermal heat pumps with no annual dollar cap. These credits directly reduce your tax liability dollar-for-dollar, making them more valuable than deductions.

13. Review Your W-4 Withholding

November is the last practical time to adjust your W-4 withholding for the current year. If you have been withholding too much (you expect a large refund), reducing withholding puts more money in your pocket now instead of giving the IRS an interest-free loan. If you have been withholding too little, increasing it now helps avoid an underpayment penalty. Use our Withholding Calculator and Paycheck Calculator to dial in the right amount.

14. Make Your Final Estimated Tax Payment

The Q4 estimated tax payment is due January 15 of the following year. If you are self-employed or have significant non-wage income, ensure your total payments (withholding plus estimated payments) cover at least 100% of last year's tax liability or 90% of this year's liability to avoid penalties. For high earners (AGI over $150,000), the safe harbor is 110% of last year's liability. See our Quarterly Estimated Taxes Guide and Tax Refund Estimator.

Documentation and Planning (Move 15)

15. Organize Records and Plan for Filing

Year-end is the ideal time to organize your tax records while the information is fresh. Gather and organize the following:

• Charitable donation receipts (cash and non-cash)
• Medical expense records (if potentially itemizing)
• Business expense receipts and mileage logs
• Investment transaction history and cost basis records
• Home improvement receipts (for energy credits or basis tracking)
• Education expense records (1098-T, textbooks)
• Childcare expense records (for the Child and Dependent Care Credit)
• Student loan interest statements (Form 1098-E)

Also review any life changes that affect your tax situation: marriage, divorce, birth of a child, home purchase or sale, starting a business, job change, or retirement. Each of these events changes your tax calculations and may unlock new deductions or credits. If you got married, check our Marriage Tax Calculator and our guide on filing jointly vs separately.

Year-End Tax Planning Quick Reference

When to Start Your Year-End Planning

The best time to start year-end tax planning is October. By then, you have a clear picture of your income for the year, there is still time to adjust 401(k) contributions across remaining paychecks, charitable organizations can process donations before the December rush, and investment transactions have time to settle before year-end. Some strategies like 401(k) changes need processing time, so starting in December may be too late to maximize contributions for the current year.

Use our suite of tax calculators throughout the year to track your tax position. The Income Tax Calculator shows your estimated federal tax, the Tax Bracket Calculator identifies your marginal rate, and the Tax Refund Estimator helps determine whether you will owe or get a refund. Together, these tools give you the information you need to make smart year-end decisions. If you earn overtime or tips, use our Overtime Calculator and Tip Calculator to factor those into your planning.

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